A key Obamacare official said he was confident that more insurance co-ops won’t fail this year, but several senators in the latest hearing on the startup failures are less enthused.
More than half of the 23 consumer-oriented and operated plans, or co-ops, created under the Affordable Care Act have shut down, with a lack of federal funds a primary reason. The shutdowns have caused more than 700,000 people to find new plans and raised pointed questions from Congress about how to get back the $1.2 billion in taxpayer funding.
Eleven co-ops remain after 12 shut down. The Centers for Medicare and Medicaid Services, which oversees the co-ops and Obamacare, refused to estimate how many co-ops could shut down.
“Each of the co-ops in business today has every opportunity to be successful this year,” acting CMS Administrator Andy Slavitt said during a Thursday hearing of the Senate Finance Committee.
Slavitt said CMS works with the states the co-ops are in and conducts financial audits to ensure they remain stable.
But several Republican senators were more critical of the co-op program.
“We could have protected taxpayers better and we could have protected patients better,” said Sen. Rob Portman, R-Ohio.
Portman added that the co-ops are “failed enterprises” as more than $1.2 billion in taxpayer funding is likely lost.
Slavitt said that the agency is working with the Department of Justice to recoup as the funding from the failed co-ops.
Committee Chairman Orrin Hatch, R-Utah, noted that funds to the federal government get a low priority when a company goes into receivership. Normally funds are doled out to other sources such as investors and then the federal government gets whatever remains.
Slavitt said the co-ops are essentially startups and that it is a challenge to build a new business that has large competitors. The co-ops were created to spur more competition in the Obamacare marketplaces.
“It doesn’t surprise me in the first couple of year that co-ops are going to lose money,” he said.
Democrats on the panel said that Republican senators were also part of the problem. Sen. Ron Wyden, D-Ore., said that co-op funding was cut by two-thirds by Congress, which contributed to financial problems for the startups.
